1. What is Loan Comparison?

Loan comparison helps you evaluate different loan options by calculating and comparing the total interest you would pay for each loan. This helps identify which loan would be more cost-effective.

2. How Does the Calculator Work?

The calculator uses simple interest formulas:

Where:

• \( P \) — Principal loan amount
• \( r \) — Interest rate (as decimal)
• \( n \) — Number of periods

Explanation: The calculator computes the total interest for each loan and shows the difference between them.

3. Importance of Loan Comparison

Details: Comparing loans helps you make informed financial decisions, potentially saving you significant money in interest payments.

4. Using the Calculator

Tips: Enter the principal amount, interest rate (as decimal), and number of periods for both loans. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for compound interest?
A: No, this calculator uses simple interest. For compound interest, a different formula would be needed.

Q2: What's the best way to compare loans?
A: Look at both the total interest and the difference between loans. Also consider loan terms and fees.

Q3: Should I always choose the loan with lower total interest?
A: Not necessarily. Consider other factors like repayment terms, flexibility, and your financial situation.

Q4: How accurate is this comparison?
A: This provides a basic comparison. Real loans may have additional fees or different compounding periods.

Q5: Can I compare more than two loans?
A: This calculator compares two loans at a time. For more loans, you would need to do multiple comparisons.